Oil edged lower as investors assessed the outlook for demand and a welter of details about a US-led plan to cap the price of Russian crude.

West Texas Intermediate traded near $86 a barrel early in Asia after a volatile ride last week, when prices swung in a wide arc to end little changed. There are concerns the demand outlook is worsening as global growth slows and China maintains its strategy of controlling Covid-19 by curbing activity.

In the US late Friday, the Treasury issued rough compliance guidelines for the proposed cap on Russian oil, focusing on the documentation needed by the private sector to adhere to the program, which is meant to kick in from December as Europe tightens sanctions on flows. Deputy Treasury Secretary Wally Adeyemo said that Moscow would have no choice but to participate.

Crude has sunk by nearly a third since June, shedding all the gains since Russia’s invasion of Ukraine. The reversal has come as central banks including the Federal Reserve tighten policy to quell inflation. The US price-cap plan, which is backed by the Group of Seven, is meant to reduce Moscow’s income from oil sales, squeezing the flow of funds used to finance the war.

Iranian nuclear talks were also in focus as the UK, France and Germany said at the weekend that they have “serious doubts” about Tehran’s commitment to a new agreement. Should a pact be agreed it could pave the way for greatly increased flows of Iranian crude to the global market.

Widely watched crude market time spreads have narrowed in recent weeks, signaling an easing of near-term tightness. Brent’s prompt spread -- the difference between its two nearest contracts -- was $1.11 a barrel in backwardation, more than $1 lower than two weeks ago.

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